LivingSocial Said to Be in Talks With Banks for $1 Billion IPO

LivingSocial, the second-largest website devoted to daily coupons, is selecting investment banks for an initial public offering that may value the company at $10 billion to $15 billion, according to a person with direct knowledge of the talks. Photographer: Jacquelyn Martin/AP

June 30 (Bloomberg) -- LivingSocial, the second-largest
website devoted to daily coupons, is selecting investment banks
for an initial public offering that may value the company at $10
billion to $15 billion, according to a person with direct
knowledge of the talks.

The Washington, D.C.-based company is seeking to raise
about $1 billion in an IPO and has had conversations with
Barclays Plc, JPMorgan Chase & Co. and Allen & Co. to lead the
offering, said the person, who asked not to be named because the
discussions are private. LivingSocial also has talked with
additional banks for the IPO, which may happen by the end of the
year, the person said.

LivingSocial would follow Internet companies LinkedIn
Corp., Yandex NV and Renren Inc. in raising money from public
markets, as well as larger rival Groupon Inc., which filed for a
$750 million IPO June 2. LinkedIn, the biggest professional-networking site, was the first major U.S. social-media company
to sell shares in an IPO. Its stock more than doubled in the
first day of trading last month.

CNBC reported yesterday that LivingSocial was in talks with
banks for an IPO, without naming them. Maire Griffin, a
spokeswoman for LivingSocial, and Brandon Ashcraft, a spokesman
for Barclays Capital, declined to comment. Howard Opinsky, a
spokesman for JPMorgan, didn’t immediately respond to a request
for comment. A call to Allen’s New York office outside normal
business hours wasn’t answered.

LivingSocial, led by co-founder Tim O’Shaughnessy, raised
$400 million in April, valuing the company at $3.5 billion, two
people said at the time. The company will generate $1 billion in
revenue in 2011, they said.

Tripling Workers

The company is tripling its workforce to 1,800 this year
and plans to more than double the cities where it offers deals
to 300, O’Shaughnessy said in an interview in December. Groupon
has more than 7,000 employees and sells coupons in more than 500
cities.

LivingSocial claims 24 percent of online daily deal revenue
in top North American markets, according to a study released
yesterday by Yipit. It gained 4 percentage points in May from a
month earlier, while Groupon lost 4 points, dropping to 48
percent.

The companies deliver daily discounts on restaurants,
hotels, events, and other goods and services. The daily-deal
market may generate $3.9 billion in U.S. sales in 2015, compared
with $873 million in 2010, according to research firm BIA/Kelsey
in Chantilly, Virginia.

Investors in LivingSocial include Twitter Inc. backer
Institutional Venture Partners, as well as T. Rowe Price Group
Inc., Lightspeed Venture Partners, Revolution LLC, Grotech
Ventures and U.S. Venture Partners. In December, Amazon.com Inc.
invested $175 million in the company.